Yes, you can accept donations in any currency that PayPal supports. For the purposes of calculation only, CritterCoin will internally convert each donation amount to USD based on the current exchange rate. This is simply used in order to determine how many Booster Reward points to add to the distribution pool as a result of each donation.
NOTE: Your actual funds will remain in PayPal in the denominations of your donations. CritterCoin does not convert your monetary funds.